JP Morgan has just published a new flattering report on staking on Ethereum 2.0. The switch to proof of participation on the network would be the lever for developing remuneration from cryptocurrency staking, and would thus make the latter an interesting source of income for institutional and individual investors.
A version 2 of Ethereum to double the revenue from staking
The authors of JPMorgan’s new report currently estimate annual revenue from cryptocurrency staking on blockchains using proof of participation at $9 billion.
That amount is expected to more than double, they say, to $20 billion, once Ethereum 2.0 switches from proof of work to proof of participation in 2022. JPMorgan’s analysts even go so far as to predict annual revenues of 40 billion by 2025 for the entire blockchain industry.
The bank’s 2 senior analysts emphasized the advantage of staking cryptocurrencies over investing in cash or cash equivalents, as well as fixed-income instruments like U.S. Treasury bonds:
“The return earned through staking can mitigate the opportunity cost of owning cryptocurrencies relative to other investments in other asset classes such as U.S. dollars, U.S. Treasuries, or money market funds in which the investments generate some positive nominal return.”
They further present cryptocurrencies as an attractive investment, stating that “in many cases, cryptocurrencies yield significant nominal and real returns.”
Crypto-currencies: a way out of the zero rate
The 2 analysts also mentioned the current environment with zero or near-zero interest rates for traditional investments, far from the returns offered by cryptocurrency exposure:
“In fact, in the current zero rate environment, we see these returns as an incentive to invest.”
While JPMorgan already seems to be under the spell of staking on Ethereum 2.0, it will still take time to fully roll out. The London update is just around the corner on the mainnet. It will see the implementation of 4 EIPs including the destruction of part of the transaction fees, supposed to make Ether deflationary.
JPMorgan may see a bright future for staking on Ethereum 2.0, but not for Bitcoin (BTC) in the short term. Indeed, the bank estimates that Bitcoin could fall into the $23,000 – $25,000 range.